23 September 2017
Steve Grob

Fidessa Fragmentation Index

Steve Grob - Fidessa

137Posts 526,706Views 3Comments

So that's nice and clear...

31 August 2017  |  4879 views  |  0

According to a few reports I read this week we should all be thankful to the European Commission for clearing up the "loophole" that existed in the current Systematic Internaliser regime. Well that's a relief – except for two small points – first they haven't and second they seem to have missed the whole point. A commission official has clarified that SIs will not be allowed to "regularly" engage in "pre-arranged matching of trades via de facto riskless back-to-back transactions". So what does "regularly" mean? Once a second, a day, a month? Presumably this will be interpreted differently according to the velocity of a stock and/or its underlying liquidity. And, bear in mind, the SI regime stretches over OTC derivatives transactions too which are even broader in their trading scope – so, no chance for confusion there then. Also, what is their definition of "riskless"? Holding risk depends upon the likelihood of prices moving against you, which again varies hugely between different stocks and instrument types. So the only way I could absolutely prove that I was really taking on risk would be to hold onto a position (even if I had the other side) until the price did indeed move against me. Again, hardly a satisfactory outcome for anybody.

It would be great if ESMA understood that simply declaring lit good and dark bad is just too much of an oversimplification and that market forces are just that – the forces that shape and dictate how markets operate. But don't worry, the European Parliament has got another 3 months to scrutinise the issue. Can't wait... 

TagsTrade executionRisk & regulation

Comments: (0)

Comment on this story (membership required)

Latest posts from Steve

Why you’ll never be ready for MiFID II

12 September 2017  |  4081 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

So that's nice and clear...

31 August 2017  |  4879 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

Relocation, Relocation, Relocation

14 June 2017  |  5483 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

MiFID II - the best thing that ever happened?

08 June 2017  |  8500 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

Be careful what you wish for

26 April 2017  |  5168 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulationGroupMiFID

Steve's profile

job title Director of Group Strategy
location London
member since 2009
Summary profile See full profile »
I am responsible for strategic development at Fidessa. This includes the development of new geographic markets and strategic partnerships and driving new industry initiatives. As part of this I head u...

Steve's expertise

Member since 2004
130 posts3 comments
What Steve reads

Who's commenting on Steve's posts